Replacement: Final Results

Braemar Seascope Group PLC 7 May 2003 For immediate release 7 May 2003 Replacement of Final Results Announcement Further to the earlier announcement of Braemar Seascope Group plc's final results for 2002-3 (RNS Number: 7628K), please note the following correction. In the consolidated profit and loss account, the first line should read Year ended 14 months to 28-02-2003 28-02-2002 £000 £000 Turnover including share of joint 26,919 25,430 ventures and not Turnover including share of joint ventures 6,919 25,430 The full amended text is below. BRAEMAR SEASCOPE GROUP plc PRESS RELEASE For immediate release 7 May 2003 Results - Year ended 28 February 2003 Braemar Seascope Group plc (the 'Group'), providers of specialised broking and consultancy services to international ship owners and charterers in the sale & purchase, tanker, offshore, container and dry bulk markets, today announced full year results for the year ended 28 February 2003. The results for the period ended 28 February 2002 comprise a 14 month contribution from Seascope, a 12 month contribution from Braemar Shipbrokers and a 4 month contribution from Braemar Tankers and are therefore not strictly comparable. HIGHLIGHTS • Turnover up to £26.9m (2002: £25.4m) • Pre-tax profit before goodwill and exceptionals £4.0m (2002: £3.4m) • Pre-tax profit £3.5m (2002: £3.3m loss) • Adjusted EPS before goodwill and exceptionals 14.43p (2002: 15.43p) • Basic EPS 10.36p (2002: 27.45p loss) • Final dividend 7.00p per share, full year 12.00p (2002: 12.00p) • New office in Shanghai opened Commenting on the results and outlook, Sir Graham Hearne, Chairman, said: 'The overall result for 2002-3 demonstrates the new Group's breadth and resilience in what for much of the year was a weak shipping market.' 'As anticipated, in the aftermath of the war in Iraq and the resumption of oil exports from Venezuela we have witnessed a noticeable softening of tanker freight rates. This trend is likely to continue while consuming nations use up extra stocks, built up in the preceding months as protection against supply interruptions, which in the event did not materialise.' 'The recovery in the Dry Cargo market has continued and freight rates are now at their highest level for many years with the outlook remaining positive.' For further information, contact: Braemar Seascope Group plc Alan Marsh Tel 020 7100 0000 James Kidwell Tel 020 7535 2881 Aquila Financial Patrick d'Ancona Tel 020 7849 3326 Peter Reilly Tel 020 7849 3319 Charles Stanley & Company Limited Rupert Dearden Tel 020 7953 2000 Philip Davies Tel 020 7953 2000 PRELIMINARY ANNOUNCEMENT - YEAR ENDED 28 FEBRUARY 2003 CHAIRMAN'S STATEMENT This is the first full year of operation since the businesses of Seascope, Braemar Shipbrokers and Braemar Tankers were merged in 2001 to create the broadly based shipping services group on which we are now reporting. The process of integrating the businesses has now largely been completed and the benefits we anticipated have begun to bear fruit. The strength of the respective brand names has been retained and during the year the Group changed its name to Braemar Seascope Group plc. The overall result for 2002-3 demonstrates the new Group's breadth and resilience in what for much of the year was a weak shipping market. Tanker chartering rates for much of the year were at a ten-year low. But since November 2002 rates increased substantially, driven in particular by the threat of war in the Middle East and the closure of oil supply from Venezuela. Dry Cargo rates suffered similarly until September 2002 since when there has been a strong progressive upturn. The level of the Group's activity in the Sale and Purchase and Offshore markets was high and both areas contributed strongly. Revenue for the year was £26.9m (2002: £25.4m) and profit before tax (before goodwill amortisation and exceptional items) was £4.0m compared with £3.4m in the prior period. Profit before tax was £3.5m (2002: £3.3m loss). The results for the period ended 28 February 2002 comprise a 14 month contribution from Seascope, a 12 month contribution from Braemar Shipbrokers and a 4 month contribution from Braemar Tankers and are therefore not strictly comparable. Adjusted earnings per share (before exceptionals and amortisation) were 14.43 pence (2002: 15.43p) and basic earnings per share were 10.36 pence (27.24p loss). The Board is recommending a final dividend of 7.0 pence per ordinary share, which together with the 5 pence interim dividend takes the total dividend for the year to 12 pence (2002: 12 pence). As anticipated, in the aftermath of the war in Iraq and the resumption of oil exports from Venezuela we have witnessed a noticeable softening of tanker freight rates. This trend is likely to continue while consuming nations use up extra stocks, built up in the preceding months as protection against supply interruptions, which in the event did not materialise. The duration of this downturn will depend to some extent on the rate of progress in the major world economies, particularly in the US and Asia, and this in turn will be influenced by cheaper oil prices, which have fallen significantly since the end of hostilities. Although there are a substantial number of new-build deliveries this year, the impact of these may be partly counter balanced by ever growing political pressure from the world's industrialised countries for an accelerated phase out of single hull tankers. The recovery in the Dry Cargo market has continued and freight rates are now at their highest level for many years with the outlook remaining positive. The Container market is also enjoying sustained strength. The early months of 2003 have seen some slow down in our second hand Sale and Purchase activity though this has been compensated for by increased New-building activity which will augur well for earnings over the course of the next two years. Despite the current low day rates in Offshore's market, the prospects for longer term and project business remain promising. The recent modest growth in Wavespec's activity level is expected to continue in the forthcoming year related to their new-build project supervision. Sir Peter Cazalet was Chairman of the Board until his retirement in November 2002 and presided over the merger of Seascope with Braemar Shipbrokers and Braemar Tankers. Under his leadership the Group has gained in both market position and financial strength and is now well placed to expand its services to its international client base. His contribution both as Chairman and as non-executive director has been outstanding and we thank him for it. I am delighted to have taken over as Chairman at a time when the company faces many exciting opportunities. I am also delighted to be joined on the Board by two new colleagues: John Denholm joined the Board as non-executive director on 26 July 2002 and James Kidwell joined the Board as Finance Director and Company Secretary on 1 August 2002, replacing Derek Walter, whose own contribution to the Group over the past two years is warmly acknowledged. The process of integrating three service businesses to form a single cohesive whole while at the same time maintaining business momentum in a competitive market place is not an easy one. That we were successful in achieving it and delivering the present results owes much to the enthusiasm and hard work of the management and staff at all levels. I would like to express the Board's gratitude for their efforts. CHIEF EXECUTIVE'S OPERATIONAL AND FINANCIAL REVIEW During a year which saw both extreme highs and lows across many sectors of the shipping market the company's overall performance was pleasing, reflecting the wide variety in its operations, skills and client base. One of the key strengths of the recent mergers was the balance they provided across our portfolio of activities. Increasingly we are able to use knowledge and skills gained in one market sector to develop business in another, and we are continuing to seek new ways to maintain an innovative service for our clients. The new Container team joined in January 2003, operating through our 50 per cent joint venture company, Braemar Container Shipping and Chartering Limited. It has made an immediate impact, which we expect to bear further fruit in the forthcoming year. We opened our first wholly-owned overseas office in Shanghai in mid February 2003, which is already generating new business for the group. China has become a location of critical importance to shipping and we hope to grow our presence in this market. We have also announced two new appointments: Quentin Soanes as Head of Business Development and Colin Cridland as Head of Research, both of which are significant steps in further developing the business and the services we offer. Chartering For the majority of the year, the sluggish world economies and a steady flow of new-building deliveries into the market resulted in weak demand and excess tonnage, which combined to ensure that freight rates were extremely low. However, a combination of factors, starting in October 2002, caused the tanker freight rates to increase substantially. Firstly, the sinking of the 26 year old tanker, Prestige, brought renewed calls for the early phase-out of single hulled ships. European authorities joined in a clamour for a 'double hull only' policy, and several countries imposed their own bans on single hulls. Secondly, the threat of war in the Middle East increased demand for crude oil and refined products, as consumers sought to build stocks to cushion against possible supply disruptions. Finally, a general strike in Venezuela crippled its oil industry and halted exports. The USA, which depends on Venezuela for around 15 per cent of its oil imports, had to seek alternative supplies from sources much further afield, and this required significantly more tanker tonnage to service the extra ton-miles involved. The combined effect of these three factors drove freight rates sharply higher for all size categories and, despite some fluctuations, the market remained strong throughout the first calendar quarter of 2003. In its 2002-3 financial year the company's earnings benefited for three months from higher crude tanker market rates due to the lag between arranging the charter and invoicing (on completion of discharge). Specialist tankers saw some of the lowest rates for at least a decade in the summer of 2002, but more recently the high oil price brought about increased rates and activity as refiners' margins improve and they seek to increase productivity. Chemicals, Specialized tankers and Gas also experienced variable markets, performing better in the second half of the year. New long-term contractual business, where we were appointed to act for major oil and commodity groups, will assist both divisions in 2003. Dry cargo rates for much of the year were low, but in recent months there has been a strong recovery particularly in the Far East, driven mainly by the trade and production in China. Our Dry Cargo activity represents a small proportion of our overall business mix, but we expect it to provide an improved result in the coming year. Sale and Purchase The three sections of the division - New-building, Second Hand sale and purchase and Demolition - all performed well in the year. Second hand prices were declining at the beginning of the year but values were underpinned by the improvement in freight rates towards the end of the year. The number of transactions concluded remained steady, although in the first half second hand business was prevalent while at the end of the year activity was more biased towards new-building. The new-building forward book increased quite significantly over the course of the year which will benefit income in the next two to three years. Offshore The North Sea saw less activity and lower day rates throughout most of 2002, despite a strong oil price. Exploration activity was low, with oil companies discouraged by the UK Government's windfall tax levy, a significant disappointment to the industry. Offshore's overall results were good, enhanced by significant project business concluded in the year. Wavespec The shipping technical consultancy business holds a pre-eminent position in the understanding of current LNG technology whilst it continues to build on its on-going relationships with oil majors and tanker owner/operators. Both turnover and profits grew in the year and margins improved as the mix of business moved towards turnkey project and engineering work and away from the supply of specialist personnel and consultants. Financial Set out in the table below is a reconciliation of adjusted pre-tax profit to reported pre-tax profit: £'000 Year to Period to 28 28 Feb 2003 Feb 2003 Adjusted pre-tax profit 4,030 3,387 Goodwill amortisation and impairment (1,034) (3,403) Exceptional income/(cost) 479 (3,310) ____________________________________ Reported pre-tax profit/(loss) 3,475 (3,326) ____________________________________ Operating profits before exceptional items and goodwill improved from £3.7m in 2002 to £4.4m, whilst the operating margin was 16.2 per cent in 2003 compared with 14.6 per cent in 2002, reflecting the growth in sales and improved cost efficiency following the changes in the composition of the Group in the 2002 financial period. Operating profits were £3.8m (2002: Operating loss £3.0m). The majority of the Company's income is US$ denominated and the average rate of exchange for conversion of US$ income in the year was $1.45/£. The majority of the expected US$ receipts for the forthcoming year to 28 February 2004 have been locked in using forward contracts at an average rate of US$1.52/£. The Company does not have an actuarial pension scheme exposure under FRS17 as all of its pension arrangements are of a defined contribution nature. Exceptional items in 2003 were in respect of the successful outcome of litigation (£254k) and the partial reversal of the vacant space provision in relation to the former Seascope offices (£225k). The tax rate on profits before exceptional income and non-deductible goodwill amortisation was 39% (2002: 38%). The tax rate is higher than the standard rate of UK tax because of the impact of disallowable trading expenses. After exceptional income and goodwill the tax rate was 49%. Net debt fell to £2.5m at 28 February 2003 (2002: £3.1m). Underlying operating cash flow was £5.0m (2002: £4.1m), calculated before movements in client commissions, tax and dividend payments. Net cash flow from operating activities was £4.3m (2002: £5.4m). The proposed final dividend of 7 pence per ordinary share, at a cost of £1,198k, will be paid on 31 July 2003 to shareholders on the register at the close of business on 4 July 2003. Together with the 5p interim dividend the Company's dividend for the year is 12 pence at a cost of £2,054k. The dividend is covered 1.2 times by earnings before exceptional income and goodwill. BRAEMAR SEASCOPE GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 28 FEBRUARY 2003 Year ended 14 months to 28-02-2003 28-02-2002 £000 £000 Turnover including share of joint ventures 26,919 25,430 Less: share of joint ventures (157) - ---------- ---------- Group turnover 26,762 25,430 Administrative expenses before exceptional items and goodwill charges (22,402) (21,719) Goodwill amortisation and impairment (1,034) (3,403) Exceptional items (note 1) 479 (3,310) Total administrative expenses (22,957) (28,432) ---------- ---------- Group operating profit/(loss) 3,805 (3,002) Share of joint venture's operating profit 18 - ---------- ---------- Operating profit/(loss) incl. joint ventures 3,823 (3,002) Net interest payable and similar charges (348) (324) ---------- ---------- Profit/(loss) on ordinary activities before taxation 3,475 (3,326) Taxation on profit/(loss) on ordinary activities (note 2) (1,702) (429) ---------- ---------- Profit/(loss) on ordinary activities after taxation 1,773 (3,755) Dividends (2,054) (1,725) ---------- ---------- Retained loss for the period (281) (5,480) ========== ========== Earnings per ordinary share - Pence (note 3) - Basic 10.36p (27.45)p - Basic excluding goodwill charges and exceptional items 14.43p 15.43p - Diluted 10.34p (27.45)p The Group has no recognised gains or losses other than those included in the consolidated profit and loss account above and therefore no separate statement of total recognised gains and losses has been presented. There is no material difference between the loss on ordinary activities before taxation and the retained loss for the period stated above and their historical cost equivalents. BRAEMAR SEASCOPE GROUP plc CONSOLIDATED BALANCE SHEET AS AT 28 FEBRUARY 2003 28 Feb 28 Feb 2003 2002 £000 £000 Fixed assets Intangible fixed assets: goodwill 18,634 19,668 Tangible assets 4,514 4,666 Investments: Investment in joint venture: Share of gross assets 61 - Share of gross liabilities (48) - ---------- ---------- 13 - Other investments 1,071 1,087 ---------- ---------- Investments 1,084 1,087 ---------- ---------- 24,232 25,421 ---------- ---------- Current assets Debtors 4,707 5,680 Cash at bank and in hand 3,255 3,241 ---------- ---------- 7,962 8,921 Creditors: amounts falling due within one year (10,568) (11,578) ---------- ---------- Net current liabilities (2,606) (2,657) ---------- ---------- Total assets less current liabilities 21,626 22,764 Creditors: amounts falling due after more than one year (3,000) (3,283) Provisions for liabilities and charges (826) (1,400) ---------- ---------- Net assets 17,800 18,081 ========== ========== Capital and reserves Called up share capital 1,719 1,719 Capital redemption reserve 396 396 Share premium 4,271 4,271 Other reserves 18,302 18,302 Profit and loss account (6,888) (6,607) ---------- ---------- Total equity shareholders' funds 17,800 18,081 ========== ========== BRAEMAR SEASCOPE GROUP plc CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2003 Year ended 14 months 28 Feb 2003 to 28 Feb 2002 £000 £000 Net cash inflow from operating activities (note 5) 4,339 5,355 Returns on investments and servicing of finance Interest received 67 72 Interest paid (418) (277) Interest element of finance lease rental payments (8) (16) ---------- ---------- Net cash outflow from returns on investments and servicing of finance (359) (221) Taxation UK Corporation tax paid (1,045) (1,961) Capital expenditure and financial investment Payments to acquire tangible fixed assets (93) (133) Purchase of investments (45) - Receipts from investments - 924 ---------- ---------- Net cash (outflow)/inflow from investing activities (138) 791 Acquisitions and disposals Purchase of subsidiaries incl. expenses - (2,019) Cash acquired with subsidiaries - 2,085 Deferred consideration paid (855) (170) ---------- ---------- Net cash outflow for acquisitions (855) (104) Equity dividends paid (1,901) (1,354) ---------- ---------- Net cash inflow before financing 41 2,506 Financing New loan 50 2,450 Loan repayment - (950) Loan acquired on acquisition repaid - (1,911) Payment of principal under finance leases (77) (43) ---------- ---------- Net cash outflow from financing (27) (454) ---------- ---------- Increase in cash 14 2,052 ========== ========== Note 1 - Exceptional items Exceptional income in 2003 relates to the successful outcome of litigation (£254k) and the partial release of a vacant space provision (£225k). In 2002 exceptional costs of £3,310k were incurred in connection with the integration of Braemar Shipbrokers and Braemar Tankers. Note 2 - Taxation The rate of taxation applicable to the company's profits before goodwill amortisation and exceptional items is 39% (2002: 38%). Note 3 - Earnings per share The fully diluted earnings per share figures are based on the weighted average number of shares after taking into account the potentially dilutive share options issued but remaining unexercised and the £3 million convertible loan notes. 2003 2002 Year ended 14 months 28 February to February £000 £000 Profit/loss after taxation 1,773 (3,755) Weighted average number of shares - basic 17,120,436 13,680,695 Basic EPS 10.36p (27.45)p Goodwill amortisation and impairment 1,034 3,403 Exceptional (income)/costs (479) 3,310 Related tax relief 143 (847) Adjusted earnings 2,471 2,111 Basic EPS excluding goodwill charges and exceptional items 14.43p 15.43p Dilution: Interest on convertible £3m loan notes net of tax £126k n/a Fully diluted earnings £1,899k £(3,755)k Fully diluted average number of shares 18,370,436 13,680,695 Diluted EPS 10.34p (27.45)p Note 4 - Reconciliation of movement in shareholders' funds 2003 2002 £000 £000 Retained loss (281) (5,480) Issue of ordinary share capital - 1,037 Other reserves arising on acquisition - 18,302 Acquisition costs debited to share premium - (457) ---------- ---------- Net (decrease)/increase in shareholders' funds (281) 13,402 Opening shareholders' funds 18,081 4,679 ---------- ---------- Closing shareholders' funds 17,800 18,081 ========== ========== Note 5 - Reconciliation of operating profit/(loss) to net cash inflow from operating activities 2003 2002 £000 £000 Operating profit/(loss) 3,805 (3,002) Depreciation charge 229 573 Exceptional write off of fixed assets - 565 Goodwill amortisation and impairment 1,034 3,403 Loss on write down of fixed assets 16 - Profit on sale of investments - (156) Write down of investments 60 - Decrease in debtors 840 1,275 (Decrease)/increase in creditors (1,071) 1,612 (Decrease)/increase in provisions (574) 1,085 ---------- ---------- Net cash flow from operating activities 4,339 5,355 ========== ========== The reduction in creditors includes a net reduction of £0.7m in commissions due to clients (2002: an increase of £1.3m). Net cash inflow from operating activities eliminating this movement is £5.0m (2002: £4.1m). Note 6 - Reconciliation of net cash flow to movement in net funds 2003 2002 £000 £000 Increase in cash 14 2,052 Decrease in finance leases 77 43 Decrease in bank loan - 950 ---------- ---------- 91 3,045 Change in net funds resulting from cash flows Non cash items Acquired finance leases - (20) New finance leases - (31) Disposal of finance leases - 55 ---------- ---------- Movement in net funds 91 3,049 Net funds at beginning of period (3,060) 91 Repayment of loan notes 563 - New bank loan (50) (2,450) Issue of loan stocks - (3,750) ---------- ---------- Net funds at end of period (2,456) (3,060) ========== ========== Note 7 The financial information set out above does not constitute the Company's statutory accounts for the year ended 28 February 2003 and the 14 months ended February 2002. The financial information in respect of the year ended 28 February 2003 has been extracted from the unaudited accounts. The audited accounts will be posted to shareholders shortly. Statutory accounts for the 14 months ended 28 February 2002 on which the auditors have given an unqualified report pursuant to section 235 of the Companies Act 1985, have been filed with the Registrar of Companies. The accounting policies are consistent with the 14 months ended 28 February 2002 statutory accounts in all material respects. This information is provided by RNS The company news service from the London Stock Exchange

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